New research reveals widespread misalignment between leaders and employees and emotional fallout from performance reviews.
Acorn, the AI-powered performance and learning management platform, announced findings from the “2025 Corporate Performance and Learning Survey” revealing that performance reviews are not just broken, they are driving talent out the door.
The data shows nearly 80% of senior leaders admit employees must leave their company to get promoted or earn higher pay, and only 29% of workers trust how their company evaluates performance.
The data shows nearly 80% of senior leaders admit employees must leave their company to get promoted or earn higher pay, and only 29% of workers trust how their company evaluates performance. With rising employee dissatisfaction and mounting stress, organizations are exploring AI-powered capability systems to fix what decades of HR processes could not.
Technology Gaps Undermine Performance Management
Organizations recognize the importance of competency frameworks but the gap between strategic vision and technical infrastructure impedes the ability to make them successful; 48% of organizations identified lack of integration between performance management, learning or talent systems as the culprit.
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Without integrated systems, even the best-designed programs collapse under manual workarounds and misaligned data. “Most organizations are flying blind because they’re missing a capability layer,” said Blake Proberts, CEO and Founder of Acorn. “Without it, every part of the HR ecosystem — recruitment, onboarding, learning, performance, workforce planning — is operating in isolation with their own tools and languages. A capability layer gives you a single source of truth for what good looks like in every role, so you can offer data-informed development from hire to retire.”
Executives and Employees Have Wildly Different Experiences of Performance Reviews
The research found a consistent gap between how typical performance systems are perceived by those who implement them versus those who are graded by these systems. While 66% of executives report confidence in their tools and frameworks, and believe their metrics are fair, a mere 19% of individual contributors say the same.
This misalignment damages trust and drives employees elsewhere. In fact, the majority of senior leaders acknowledge that employees have to leave to advance their careers.
“Most organizations still have no reliable way to evaluate performance based on what people are actually capable of. No wonder 60% of employees say their metrics are not fair. The industry has spent decades and millions of dollars trying to fix the wrong problem. We don’t need another HR process, we need real capability systems that objectively and consistently map what people can do, what they need to learn and how that moves the business forward. Anything less pushes great talent out the door,” added Keith Metcalfe, President of Acorn.
Performance Reviews Impact Mental Health, Crushing Motivation
Beyond metrics and processes, the research shows the profound human cost of broken performance management systems. One in four employees question their value to their organization after a performance review. Most respondents said past performance reviews have made them feel anxious or stressed and feel uninspired or less productive. One-third of respondents said that their most recent performance review felt like a checkbox exercise.
Yet organizations continue to spend heavily on ineffective systems: 36% say they invest between $250,000 and over $1 million annually on performance tools and processes. This represents massively wasted resources amid a failure of organizations to recognize and support the human elements of performance.
New AI-Enhanced Approach to Performance Management Shows Promise
In light of a challenging landscape, both leaders and employees agree change is needed. Organizations are embracing a new model for performance management that fuses human insight with cutting‑edge technology. Significantly, 89 % are open to AI‑powered solutions to repair broken performance reviews.
A vast majority (92%) support the idea of using a capability index, which is an employee-specific score, as a foundation for performance conversations. Employees also want a more meaningful experience: 95% say two-way performance conversations between managers and employees are important.
“This is the time to rethink how we support our people at work,” said Proberts. “The organizations that win will be the ones that reward real capability with a system that identifies strengths, supports growth and makes feedback useful, not painful.”
By establishing clear competency frameworks aligned with business goals, companies envision more transparent, fair and effective performance assessment.
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Source: Businesswire
